WASHINGTON, Sept 21 (Reuters) - The following are highlights
of Federal Reserve Chair Janet Yellen's press conference on
Wednesday following the end of a two-day meeting of the U.S.
central bank's policy-setting committee.

Yellen on the Fed not being politically motivated:

"I have no concern that the Fed is politically motivated and
I will assure you that you will not find any signs of political
motivation when the transcripts are released in five years. It
is important that we maintain the confidence of the public and I
do believe that we deserve it. I know that these are difficult
decisions and everybody may not agree with them but I hope the
public will understand that we are striving to do our best to
pursue these goals that matter to all of us."

Yellen on decline in business spending:

"Investment spending really has been quite weak for some
time and we are really not certain exactly what is causing that.
Part of it of course has been the huge contraction in drilling
activity associated with falling oil prices, but the weakness in
investment spending extends beyond that sector and I'm not
certain of exactly what explains that ... I'm not aware of
evidence that suggests that it's political uncertainty."

Yellen on commercial real estate:

"I would say in the area of commercial real estate, while
valuations are high, we are seeing some tightening of lending
standards and less debt growth associated with that rise in
commercial real estate prices. But more generally we are not
seeing signs of leverage building up or maturity transformation
in the way that we saw in the run-up to the crisis and we are
keeping a close eye on it."

Yellen on moderate threats to financial stability:

"The threats to financial stability I would characterize at
this point as moderate. In general I would not say that asset
valuations are out of line with historical norms."

Yellen on politics plays no role in Fed decisions:

"I can say emphatically that partisan politics plays no
role in our decisions about the appropriate stance of monetary
policy. We are trying to decide what the best policy is to
foster price stability and maximum employment and to manage the
variety of risks that we see as affecting the outlook. We do not
discuss politics at our meetings and we do not take politics
into account in our decisions."

Yellen on credibility and revisions of forecasts:

"We all agree we are undershooting our inflation goal and
that we want to make sure we stay on a course that raises that
to 2 percent, and we're struggling with a difficult set of
issues about what is the new normal in this economy and in the
global economy more generally, which explains why we keep
revising down the rate path."

Yellen on economy has more room to run:

"The economy has a little more room to run than might have
been previously thought. That's good news....We don't see the
economy is overheating now."Yellen on little risk of falling
behind curve:

"Since monetary policy is only modestly accommodative, there
appears little risk of falling behind the curve in the near
future, and gradual increases in the federal funds rate will
likely be sufficient to get to a neutral policy stance over the
next few years.

Yellen on cautious approach:

"This cautious approach to paring back monetary policy
support is all the more appropriate given that short-term
interest rates are still near zero, which means that we can more
effectively respond to surprisingly strong inflation pressures
in the future by raising rates than to a weakening labor market
and falling inflation by cutting rates."

Yellen on rate outlook:

"We judged that the case for an increase has strengthened
but decided for the time being to wait for further evidence of
continued progress toward our objectives."

Yellen on why rates kept on hold:

"Our decision does not reflect a lack of confidence in the
economy. Conditions in the labor market are strengthening and we
expect that to continue. While inflation remains low we expect
it to rise toward the 2 percent objective over time. But with
labor market slack being taken up at a somewhat slower pace than
in previous years, scope for some further improvement in the
labor market remaining and inflation continuing to run below our
2 percent target, we chose to wait for further evidence of
continued progress toward our objectives."

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